Thursday, March 18, 2010

Technical Picture - $USD Strength Weighs on Energy/Commodities

A choppy mixed session of little consequence to the overall bias. Dollar strength weighed on energy/commodities and if it continues, we could get more of a pullback. As depicted on the NASDAQ chart above, at this point, the markets are pricing higher as momentum weakens.

From the 15 minute chart of POT above, we see that it is a relatively easy read with respect to support/resistance due to the gaps. Wednesday's gap was filled in early trade, but price carved out inside bars ready to break to the downside. The NRIB was the trigger. After the initial swoon, price paused at the guidance gap support from last week...more inside bars and that level failed as well. Finally the trade was stopped out. From there, price retested former support, now resistance.

I've mapped several areas of support for a buying opp, but the full gap fill would attract a lot more buyers IMO.

As discussed last night, the RIMM swing trade was in peril. Early strength was attibuted to an analyst target increase. But that didn't last long. I exited half at $75.00 and was stopped out as soon a price breached yesterday's low.

I agree that after 3 consecutive red WRBs on the daily, that POT looks attractive here. But I would still like to see it capitulate as it fills the guidance gap. That way I can swing and day trade it simultaneously. I'm looking at the 15 minute timeframe with downsloping 50 SMA tracking at $122 thinking it will hold as resistance.

The 6 day EMA for swings is something I borrowed from John Carter (TradetheMarkets.com). He uses a 6 period average to color his TTMs. I don't want to exit these swing trades prematurely, so I decided to add the extra day wiggle room.

My only open swing at this point is AAPL and Friday it closed below the 6 day EMA, so technically I should dump it tomorrow, but I'm hopeful it will bounce on second test of $220.00 à la turtle soup.